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Court of Appeal Clarifies PPI Refunds to IVAs

A judgement handed down in the Court of Appeal this month will have implications for all consumers that are subject to individual voluntary arrangements (IVAs).

Judgement by the Court of Appeal in the case of Green v Wright has now clarified what will happen to any refunds made from payment protection insurance (PPI) paid to people who have completed an individual voluntary arrangement (IVA), a form of insolvency.

It has been decided that certain PPI refunds will go not to the consumer, but to the supervisor of the IVA. The supervisor can then distribute the funds to the debtor’s creditors.

Crucially, this course of action will happen even if the debtor has previously been awarded a certificate of completion to mark the end of their IVA.

The case concerned a debtor that had an ‘all assets’ IVA, which means that the debtor has agreed that all of their assets are subject to the terms of the IVA. The ruling will affect all similar individual voluntary agreements.

Individual voluntary arrangements (IVAs) are the most used insolvency procedures and constitute more than half of all insolvencies each year.

Chair of R3?s personal insolvency committee, Mark Sands, commented: ‘The Green v Wright appeal judgment is a welcome clarification for insolvency practitioners, debtors, and creditors on what should happen to assets that come to light after a completion statement has been issued.

‘As a result of uncertainty over the case, the completion of some IVAs has been delayed while supervisors awaited a final judgment. In many of the cases affected by the judgment, supervisors should now be able to finalise the closure of these cases without delay, and debtors will be relieved to be able to receive their IVA completion certificates.

‘The judgment has important ramifications for current and future IVAs. This is a crucial reminder for debtors that when they agree that all their assets are affected by an IVA, this includes assets they don?t know they have at the time the agreement is made.’

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